Discretionary fiscal policy is
A) the responsibility of the Federal Reserve System.
B) designed to increase the size of recessionary and inflationary gaps.
C) focused on making the 45-degree line more vertical.
D) intended to ensure continuing corporate dividends under changing sales conditions.
E) implemented through changes in government expenditures and tax rates.

Question

Quizplus · Accepted Answer

Discretionary fiscal policy is implemented through changes in government expenditures and tax rates. This policy is used to stabilize the economy by increasing government spending during a recession and decreasing government spending during inflation. Additionally, tax rates can be adjusted to encourage spending during a recession or to control inflationary pressures.

Discretionary Fiscal Policy Is